Microsoft Plans to Offer Call of Duty on Game Pass

Microsoft (NASDAQ:MSFT) plans to offer the upcoming version of “Call of Duty,” one of the most successful game franchises, through its subscription service, Game Pass, instead of exclusively selling it as a standalone title. The Wall Street Journal first reported this news. It’s worth noting that Microsoft acquired Call of Duty through its buyout of Activision Blizzard.

This new sales strategy is expected to be announced at Microsoft’s annual Xbox showcase next month. Gamers will still have the option to buy the game outright for consoles or PCs.

Here’s Why MSFT is Shifting its Strategy

Call of Duty is a highly lucrative game franchise that consistently generates significant revenue through a direct sales model with a premium price. Meanwhile, Game Pass is Microsoft’s subscription service, which costs between $9.99 and $16.99 per month, and offers access to multiple games from various developers, available exclusively on Xbox consoles and PCs. 

By adding Call of Duty to Game Pass, Microsoft might initially see lower revenue per copy than standalone sales. However, this strategy is expected to attract new subscribers, boosting long-term revenue. In a similar move, Microsoft saw a record number of new subscriptions in a single day after adding the science-fiction game Starfield to Game Pass last year.

Analysts Upbeat on Change in Selling Strategy 

According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bullish on MSFT believe that adding Call of Duty to Xbox Game Pass has the potential to significantly boost subscriptions.

Macquarie analyst Frederick Havemeyer reiterated a Buy rating on MSFT stock on May 17, expressing confidence in this change in selling strategy. The analyst noted that the move shows that Microsoft can leverage its leading gaming portfolio to drive the adoption of its subscription-based Game Pass service.

What is the Prediction for Microsoft Stock?

Microsoft stock has gained about 32% in one year, reflecting its growing artificial intelligence (AI) capabilities. Moreover, its gaming revenue is expanding, marking 51% growth year-over-year in Q3 of the current Fiscal year. 

Analysts maintain a bullish stance on Microsoft stock. It has 31 Buys, one Hold, and one Sell for a Strong Buy consensus rating. Analysts’ average price target on MSFT stock is $491.56, implying 16.98% upside potential from current levels.

Disclosure